Tuesday, December 15, 2009

The Biology of Debt

My esteemed colleague, R. George Wright, points me to a new paper on SSRN by Jan-Emmanuel De Neve and James H. Fowler, claiming a link between genetics and propensity to indebtedness:
Having one or both MAOA alleles of the low efficiency type raises the average likelihood of having credit card debt by 7.8% and 15.9% respectively. About half of our population has one or both of the MAOA alleles of the low type. The results suggest that economists should integrate innate propensities into economic models and consider the welfare consequences of possible discrimination by lenders on the basis of genotype.
I don't feel qualified to adjudge the analysis in the article, but the potential policy implications are fascinating and somewhat scary. Should those with the low-efficiency MAOA alleles be entitled to debt relief, gene therapy, or both? Should genetic analysis become a feature of creditworthiness tests? Should those with a genetic propensity to indebtedness be charged higher interest rates to offset the genetic propensity?

Needless to say, a lot more research is required into the alleged links between genetics and indebtedness before any potential policy implications are seriously considered.

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